Team Decision Making in Operations Management
44 Pages Posted: 20 Sep 2018 Last revised: 24 Oct 2018
Date Written: September 12, 2018
We study team decision making in two operational settings: standalone Newsvendor inventory decisions (tactical decision-making) and Newsvendor under information (strategic decision-making). The existing behavioral OM literature has primarily studied individual decision makers. However, the behavioral economics literature suggests that teams may make better decisions in tactical settings, and may be more strategic and self-interested. We conduct a laboratory experiment, expanding on Özer et al. (2011), to examine whether teams behave differently in these settings. We find that teams actually perform worse than individuals when making Newsvendor decisions, and exhibit a stronger pull-to-center bias. In the information sharing game team retailers are to be less trustworthy (distorting the information they send by a larger amount) while team suppliers are just as trusting as individual suppliers (making similar decisions given the information they receive). A novel aspect of our experiment is that we let subjects chat freely within the team to facilitate decision-making. By analyzing team chats, we are able to: (a) answer why teams perform worse than individuals in Newsvendor decision-making; (b) study whether existing theories are consistent with the decision processes reflected in our chat data.
Keywords: Team, Decision Making, Newsvendor, Information Sharing, Chat Analysis
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